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A New Year, a New Barrel

Last year was a good one for stocks and, by association, for the Bottom of the Barrel portfolio. The Barrel is an eclectic selection of small-cap stocks that are undercovered by traditional analysts and, in many cases, underowned by institutional investors.

As we begin 2004, I've eliminated a number of stocks from the portfolio. Although some of the decisions were difficult, it was time to make room for some new names. I based the decisions partly on performance but also on relevance, taking into account the number of reader responses I received on a particular stock, the industry it's in and its potential to be interesting in the year ahead. Here's the short list:

That leaves us with 20 good small-cap names as the foundation of the 2004 Barrel portfolio. Remember, this is a group of small-cap, largely underfollowed stocks. As such, they are more volatile, and they have a higher level of risk and speculation. Be sure that you thoroughly understand the risks of small-caps -- a lack of liquidity, a lower level (and sometimes quality) of information flow and potentially choppy action in price movement -- before you invest.

With that in mind, here's a quick look at some of the remaining Barrel stocks.

Remaining Energized

If you read my columns regularly, you won't be surprised to see a host of energy names staying in the portfolio.
Maverick Tube(MVK) has been a solid performer over the past year, as drilling activity has seen a slow and steady pickup. Maverick benefits from increased drilling because it translates into more demand for tubular goods -- drill pipe and the like -- that are used in oil and natural gas wells. However, steel costs are likely to put pressure on Maverick's margins this year. The easy money has probably been made with this stock at around $20, but the exploration cycle should still give Maverick some strength.